9911796707
TMI Blog2021 (8) TMI 743X X X X Extracts X X X X X X X X Extracts X X X X ..... ing that reopening an assessment beyond six years is bad in law and hence illegal. 2. On the facts and under the circumstances of the case and in law, the Learned Commissioner of Income-tax (Appeals) erred in confirming the action of A.O of reopening the assessment u/s 148 beyond four years by stating that since the asset is located outside India as the provision of section 149(1)(c) relating to assessment beyond four years but within sixteen years is applicable to the appellant without appreciating the fact that appellant is mere nominee to the foreign account and hence the provision is itself not applicable to the appellant as no such appellant asset is located outside India. Hence reopening the assessment u/s 148 of the Act beyond four years is bad in law. The amendment to section is prospective in nature and reopening for A.Y 2005-06 is not valid as time limit for six years have lapsed. 3. On the facts and under the circumstances of the case and in law, the Learned Commissioner of Income-tax (Appeals) erred in confirming the action of A.O of making addition of Interest amount of Rs. 93,528/- being 50% of the total interest of Rs. 1,87,056/- earned on the foreign bank accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied the ownership of the funds deposited in the aforesaid bank account. It was submitted by the assesssee that the aforesaid bank account no. 10388171 with HSBC Private Bank, Zurich was opened by her mother Mrs. Pushpa N. Khimji who was aged 72 years and was residing in Muscat, Sultanate of Oman since last 47 years. It was submitted by the assessee that her name was added in the aforesaid bank account because there was no law relating to nomination in Geneva. In order to fortify her aforesaid claim, the assessee filed an affidavit dated 15.02.2013 wherein it was deposed by her that the funds lying in the aforesaid bank account belonged to her mother Mrs. Pushpa N. Khimji. Further, it was therein stated by the assessee that all the transactions qua the aforesaid bank account were carried out by her mother. In order to substantiate the aforesaid factual position the assessee on 26.03.2015 filed with the A.O a letter signed by her mother Mrs. Pushpa N. Khimji wherein she had admitted that the bank account was opened by her and all the transactions therein were made by her. However, the A.O was not persuaded to accept the aforesaid claim of the assessee. It was observed by the A.O that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t number 7019 which was acted upon by the bank that had pursuant thereto debited the amount on 27.08.2009; and (iii). place EUR 1,00,000 in a monthly DCDW/ISB at market rate to be renewed on monthly basis. 4. Backed by the aforesaid facts, the A.O was of the view that the assessee was not a mere nominee in the aforesaid HSBC Bank account, but a joint account holder exercising full ownership and control rights over the funds in the said bank account. Accordingly, the A.O rejected the claim of the assessee that the entire funds in the aforesaid foreign bank account were deposited by her mother, and thus, she only being a nominee was neither liable to be assessed in respect of the deposits nor the income that had accrued/received in form of surpluses on account of earnings of interests and profits arising therefrom. It was observed by the A.O that the assessee had failed to discharge the onus that was cast upon her as regards proving that the funds invested in the aforesaid bank account and the income arising therefrom belonged to her mother. Rather, it was observed by the A.O that though it was the claim of the assessee that the entire investment in the aforesaid foreign bank accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and A.Y 2007-08. It was noticed by the CIT(A) that on appeal the CIT(A)-55, Mumbai, vide his order passed in Appeal No. CIT(A)-55/ITO(IT)-3(3)(1)/IT-41/2015-16 vide his order dated 15.06.2016 had held that the source of the deposits reflected in the HSBC Private Bank, (Suisse) SA, Geneva were out of the credit balances in the bank accounts of Mrs. Pushpa N. Khimji with ANZ Grindlays Bank, Muscat. Further, it was observed by the CIT(A) that the appeals filed by the revenue against the order passed by the CIT(A)-55, dated 15.06.2016 were thereafter dismissed by the Tribunal, vide its consolidated order passed in ITA No. 5947/Mum/2016 & ITA No. 7405/Mum/2016, dated 30.04.2019 for A.Y 2006-07 and A.Y 2007-08, respectively. Referring to the observations recorded by the Tribunal, it was observed by the CIT(A) that it was therein observed that the husband of Mrs. Pushpa N. Khimji had right from 1998 onwards deposited out of the earnings from his construction business amounts in his bank account No. 10388171 with ANZ Grindlays Bank, Muscat, which as increased with the interest therein credited quantified at USD 704220, and the said amount was thereafter deposited with HSBC Private Bank ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the relevant assessment year. It was further submitted by the ld. A.R that the CIT(A) had wrongly upheld the reopening of the assessee‟s case by the A.O under Sec. 149(1)(c) of the Act. Elaborating on his aforesaid contention, it was submitted by the ld. A.R that as the assessee was only a nominee to the foreign account of her mother, therefore, in the absence of any asset (including financial interest in any entity) located outside India its case could not have been reopened by drawing support from the extended time period contemplated in clause (c) of sub-section (1) to Sec. 149 of the Act. Alternatively, it was submitted by the ld. A.R that as the amendment to Sec. 149 which extended the time limitation for reopening an assessment to sixteen years was made available on the statute vide the Finance Act, 2012 w.e.f 01.07.2012, therefore, the same could not have been resorted for reopening the proceedings which stood concluded before the amendment became effective. As such, it was the contention of the ld. A.R that the subsequent amendment to Sec. 149 by the Finance Act, 2012, which extended the limitation for initiation of reassessment proceedings to sixteen years could not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dicial pronouncements that have been pressed into service by the assessee‟s counsel. Adverting to the merits of the case, we find, that the controversy in hand hinges around the assessability of the interest income accruing/arising from the funds that were deposited in the foreign bank account, viz. HSBC Bank, Zurich. As observed by us hereinabove, the Tribunal while disposing off the appeals in the case of the assessee‟s mother, viz. Mrs. Pushpa N. Khimji for A.Y 2006-07 and A.Y 2007-08, vide its consolidated order passed in ITA No. 5947/Mum/2016 and ITA No. 7405/Mum/2016, dated 30.04.2019, had observed, that the amounts deposited in the bank account with HSBC Bank, Zurich, belonged to Mrs. Pushpa N. Khimji (supra), and the same were received by her by way of inheritance on the death of her husband on 15.07.1988. Although, the CIT(A) while passing the impugned order had concluded that the source and ownership of the deposits in the aforesaid foreign bank account, viz. HSBC Bank, Zurich, was satisfactorily explained as belonging to Mrs. Pushpa N. Khimji, but was of the view that as the assessee was a joint holder of the said bank account and had possession of the funds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t accrued/arising from the funds deposited in the said bank account. Hence, 50% of the interest receipts in the financial year relevant to the instant assessment year must be apportioned to the appellant as her share. Accordingly, 50% of Rs. 1,87,056/- of income accrued/received therein on account of interest is liable to be assessed in the hands of the appellant. The A.O is directed to retain the addition to 50% of Rs. 1,87,056/- and delete the sum of Rs. 93,528/-." 9. We have deliberated at length on the issue in question and are unable to concur with the view therein taken by the CIT(A). In our considered view the taxing of an income and the source thereof are intricately interwoven and cannot be divorced from each other. As held by the Hon‟ble Supreme Court in the case of ITO vs. Ch. Attchaiah (1996) 218 ITR 239 (SC) income has to be assessed in the hands of the right person and the right person alone. Accordingly, in the backdrop of the aforesaid mandate of law, we shall herein deliberate on the aspect as to whether or not the assessee before us, viz. Smt. Manisha Jaitha, as held by the CIT(A), is the person who is rightly liable to be assessed qua 50% of the interest i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount, but the same would by no means justify relating of any part of the interest income on such funds/deposits lying in the said foreign bank account in the hands of any other person except for the owner of said funds, viz. Mrs. Pushpa N. Khimji. Accordingly, in the backdrop of our aforesaid deliberations not being able to persuade ourselves to accept the view taken by the CIT(A) that 50% of the interest income i.e an amount of Rs. 93,528/- (50% of Rs. 1,87,056/-) was liable to be brought to tax in the hands of the assessee, we, thus, set-aside his order to the said extent and vacate the addition of Rs. 93,528/- that was sustained by him. The Grounds of appeal No. 3 is allowed. 10. As we have allowed the appeal of the assessee on merits and vacated the addition to the extent the same was sustained by the CIT(A), therefore, we refrain from adverting to and therein adjudicating the contentions advanced by the assessee vis-a-vis the validity of the reopening of the case of the assessee, which are left open. The Grounds of appeal Nos. 1 & 2 are left open in terms of our aforesaid observations. 11. The appeal of the assessee for A.Y 2005-06 in ITA No. 342/Mum/2020 is allowed in terms ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
